Union Cabinet okays ordinance to push digital, cheque modes

In a bid to promote salary payments by employers via banking channels, the Union Cabinet on Wednesday cleared an ordinance for amendment of the Payment of Wages Act, 1936, facilitating removal of the need of obtaining a written authorisation from an employee for payment of wages by cheque or through a bank account. The relevant […]

In a bid to promote salary payments by employers via banking channels, the Union Cabinet on Wednesday cleared an ordinance for amendment of the Payment of Wages Act, 1936, facilitating removal of the need of obtaining a written authorisation from an employee for payment of wages by cheque or through a bank account. The relevant government, Centre or state, shall notify to specify the industrial or other establishments where the employer shall pay wages “only” by cheque or by crediting the wages in the bank accounts, according to the proposed amendment, which the government had introduced in Winter Session of Parliament last week but was unable to get it passed.

The labour ministry, however, clarified in a statement that the proposed amendment does not close the option of cash for salary payments to workers. “This is being done to facilitate the employers from making payment of wages using the banking facilities also in addition to the existing modes of payment of wages in cash,” the statement said. “It is clear that the option of payment through cash is still available,” it added.

The proposed changes in the Payment of Wages Act, 1936 will be applicable for all central sector establishments and for workers with salary not exceeding Rs 18,000 per month, Minister of Labour and Employment Bandaru Dattatreya told reporters.

Through an amendment effective 1975, the provision of payment of wages through cheque or bank account was inserted in the Payment of Wages Act, 1936, with the condition that “the employer may, after obtaining the written authorisation of the employed person, pay him the wages either by cheque or by crediting the wages in his bank account.” At present, the Act covers all those employees in certain categories of establishments whose wage does not exceed Rs 18,000 per month.

The states of Andhra Pradesh, Telangana, Kerala, Uttarakhand, Punjab and Haryana have already come out with notifications to provide for payment through banking channels, the labour minister said.

The amended provisions will come into effect after the President gives his assent to the ordinance. An ordinance is valid for six months only. The government is required to get Parliament’s approval for the ordinance within that period.

Trade unions opposed the timing of the ordinance to bring the amendments to the Act by the government. General Secretary of Centre of Indian Trade Unions (CITU) Tapan Sen told PTI: “They are lying. The bill introduced in the Parliament clearly bars payment of wages in cash by industries notified by Centre and states..this is not the right time for bringing this ordinance as workers are already going through tough times due to currency crunch following demonetisation.”

The payment of wages through cheque or crediting it in the bank account of employed persons will reduce the complaints regarding non-payment or less payment of minimum wages, besides serving the objectives of digital and cashless economy, the statement of objectives of the amendment introduced in Parliament had stated.

Earlier on December 15, Dattatreya had introduced the Payment of Wages (Amendment) Bill, 2016 in Lok Sabha, but it could not be cleared amid din over the government’s decision to scrap high-denomination currency notes.

The Payment of Wages Act is enforced in central sphere as well as state sphere by appropriate government in their respective jurisdiction in relation to railways, air transport services, mines and oilfields, the central government companies and all other companies of the state government.

The Payment of Wages (Amendment) Act, 1957 from April 1, 1958, had extended the scope of the Act to cover persons earning Rs 200 or more but less than Rs 400 per month as against the earlier provision for salary less than Rs 200 per month. The Payment of Wages (Amendment) Act, 1976 extended application of the Act to persons earning less than Rs 1,000 per month and the limit was further extended in 1982 to cover persons earning less than Rs 1,600 per month. Through subsequent amendments in the Act, the scope of coverage was further extended to Rs 6,500 in 2005, to Rs 10,000 per month in 2007 and Rs 18,000 per month in September 2012.